THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

JOHN KING, HOST: Thanks, Candy, and good evening everyone. Tonight, a vicious and deadly assault on anti-government demonstrators by a vital U.S. ally in the Arab world. Eyewitnesses in the Bahraini capital of Manama report some of those shot by the military riot police were sleeping -- let's take a look at some of the pictures as this plays out -- some of them were sleeping. Some were women and children and some of those roughed up were doctors and paramedics who came to treat the wounded.

It is a horrible scene there. Now Bahrain is right here. It is a tiny island kingdom, tiny but very important, connected to Saudi Arabia by a 14-mile causeway. Iran right over here, across the Persian Gulf. At the White House today a blunt rebuke of the kingdom's crackdown.

(BEGIN VIDEO CLIP)

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: The United States believes strongly that violence is not an appropriate reaction when the peoples of this region or any region are peacefully protesting and airing their grievances.

(END VIDEO CLIP)

KING: But the administration is more than a little nervous about what comes next in this latest Middle East flashpoint. There is a U.S. naval station in Bahrain that is critical to U.S. efforts to safeguard oil shipments from the region and efforts to put a check and a watchful eye on Iran's ambitions in this vital neighborhood. But heartbreaking is one word "The New York Times" columnist Nicholas Kristof used in a column and a separate tweet today after he had a first-hand look at the results of the bloody crackdown. We spoke a bit earlier.

(BEGIN VIDEOTAPE)

NICHOLAS KRISTOF, COLUMNIST, NEW YORK TIMES (via phone): Well I have been to the hospital now a couple of times today and it was just overwhelmed with hundreds and hundreds and hundreds of people with every kind of injury imaginable. It was flooded with mothers who had lost their children and were just frantic trying to locate their children because in the tear gas attack and the bullets flying, people just fled in every which direction.

And there is still quite a number of people who are just missing. We don't know what happened to them. But maybe the person who just broke my heart the most was a doctor, a plastic surgeon who had just returned from a trip to Houston and he was on the roundabout, in the Pearl roundabout treating the injured and the riot police came, according to other doctors, according to his family, he identified himself as a doctor but the riot police grabbed him. They mocked him as a Shiite.

They handcuffed him. Then they beat and kicked him, broke his nose. He is still a bloody pulp. He's on oxygen. He cannot speak. And then they pulled down his pants and said that they were going to rape him, though in the end they did not, in fact, do that. When that happens to a plastic surgeon, a respected plastic surgeon, you just you know can't imagine what happens to people who were anonymous.

KING: Bahrain is a place I visited several times over the years on either to cover the military, the U.S. has the big important naval station there or on diplomatic missions and it is a place that projects itself as the kinder, gentler, the softer, the more moderate, the more open Arab society and yet you are seeing glimpses of something very, very different.

KRISTOF: Yes, I thought I knew Bahrain and I admired what I knew in many ways. It really had been something of a beacon of tolerance and moderation in the Gulf area. This is -- it's not only a wealthy area. It's the banking capital. It's cosmopolitan. It's highly educated. Women play a significant role in society and then you have a ruler in a place like this open fire on his people, it is not only heartbreaking, it just shatters every understanding you have about this place.

KING: And then what was your sense at the hospital? The people who are dealing with their mourning and their grief and their injuries and their pain? In Tahrir Square after the initial crackdown, those demonstrators proved they weren't going anywhere and they brought about revolution. What is the mood and the spirit there?

KRISTOF: Well, people say that they will sacrifice themselves. Just now at hospitals they were chanting that you know they will shed Arab blood for the martyrs and sacrifice themselves. I mean in fact, I have covered a lot of these democracy movements and, generally, frankly, the history is that the key factor in determining whether a democracy movement succeeds or not is not the courage of the people or their vision, but it is rather the willingness of the government to kill people and where government is ruthless enough, it will typically survive. If Hosni Mubarak had actually been able to have troops open fire in large numbers on people in Tahrir, he might still be in power. And you know I fear that that may be one lesson that the king here had absorbed.

(END VIDEOTAPE)

KING: Now you heard that account, a chilling account from Nick Kristof of "The New York Times". I want to go back to some of these pictures. Here's the pictures from Thursday night and this is Pearl, the Pearl roundabout, which to the Bahraini protesters has become their Tahrir Square. That's the scene when the riot police came in with tear gas, firing bullets and again eyewitnesses say many of the protesters were sleeping when they were shot.

That's one scene. And you heard Nick Kristof's account of the hospital. Here, you see people being rushed and treated at the hospital in Manama, the capital of Bahrain. Just a short time ago despite all the eyewitness accounts the new special envoy for the Bahraini government -- his name is Abdul Latif Bin Rashid Al Zayani -- he spoke to CNN and he defended the government's crackdown.

(BEGIN VIDEO CLIP)

ABDUL LATIF BIN RASHID AL ZAYANI, BAHRAINI SPECIAL ENVOY TO THE U.S. (via phone): I have explained that the force used was really proportional, we had to use it, because it was necessary, and the process started to really destruct our national economy and scaring the people.

(END VIDEO CLIP)

KING: That's the explanation from the Bahraini government's new special U.S. envoy. Let's check in live now with our senior international correspondent, Nic Robertson, who has been right there tracking all this. And Nic, when you listen to the special on envoy saying the response was proportional. He says some of the demonstrators were armed, that they were disrupting things in the square, not peacefully protesting, that is at odds and not just a little bit at odds, is it not, with your reporting and the eyewitness accounts?

NIC ROBERTSON, CNN SR. INTERNATIONAL CORRESPONDENT: It is. We were in the hospital and the hours immediately after the crackdown and talked to some of the people there. They say that they were sleeping, that they weren't in the least bit prepared for the police coming in. The interior ministry here has said that the protesters were given fair warning. They told us that they weren't.

The government has shown on television today pictures of knives and guns and even circulated to journalists like ourselves, pictures of wounded security policemen, some of them with some quite significant injuries, saying look, this is what happened to our security officers as well. That there were some pitched battles that there was fighting going on. They said that 50 security officials were injured.

But it's very -- it's very hard to square that with a picture of what we saw going on last night, which was a large number of heavily armed police and a very carefully, coordinated, planned and prepared operation go into that square with the one goal of driving everyone off. And I think what we heard from the foreign minister here today say -- essentially the same thing as the special envoy, the country is staring into a sectarian abyss. They had to do something. It all comes back to protecting the economy in the country here -- John.

KING: Protecting the country is the regime's statement. Also the Gulf Cooperation Council was meeting there in Manama. Obviously the influential foreign ministers from the region who are all nervous about the potential spread here. Nic, what came out of that meeting and what's your sense of what's next?

ROBERTSON: Well, it was a very tough message for any protester in any of these countries. It said (INAUDIBLE) it was essentially an all for one and one for all. That if the security of any one country of the eight members in the GCC, the Gulf Cooperation Council, if any one of those members security is threatened, it effectively means they say with the security and the stability of all (INAUDIBLE) is threatened (INAUDIBLE) sort of language (INAUDIBLE) using, which means they will come in to support and aid the security of any states.

So Bahrain can count, for example, on the Army of Saudi Arabia and the Army of the Omani (ph) should they choose, should they (INAUDIBLE). There is no doubt here for the king tonight that he knows he has got a lot more military muscle to back up his own security forces if the problems get that big, if he needs it, if that's the direction they go in -- John.

KING: Nic Robertson, live for us in a very fragile and volatile Manama, Bahrain. Nic, thanks for your reporting. Let's discuss the volatility and the stakes for the United States here with our national security contributor Fran Townsend. She's a member of the External Advisory Committees for both the Department of Homeland Security and the CIA.

Number one, Bahrain, has a vital U.S. area. I've been to the Naval Installation there. I've been there with vice presidents going back several administrations and I don't know if we have ever had a president go to Bahrain in my time in Washington, but this one is important, and yet -- and yet the administration is furious at the violence and the crackdown.

FRANCES FRAGOS TOWNSEND, CNN NATIONAL SECURITY CONTRIBUTOR: Yes, John, you can't underscore what a precipice this is. I mean the significance of the GCC statement has to be sort of underscored. Here, they view themselves as -- Bahrain, thus goes Bahrain, goes the Gulf. You know Saudi Arabia has the bridge. You mentioned it earlier. My understanding is that there are significant force increases on the Saudi side of border including along the oil fields. They have a critical infrastructure force of 45,000 that's on alert to protect the oil fields. The largest Shia -- although the Shia are a minority in Saudi Arabia. Their largest population concentration is along that eastern province right near Bahrain and so this is an incredibly strategic point for all of the Gulf countries.

KING: And I want you to listen. Secretary of State Clinton back in December, so just a few months ago, she was talking to a group at a town hall meeting in Bahrain. And listen to her talking about her optimism that reforms will happen.

(BEGIN VIDEO CLIP)

HILLARY CLINTON, SECRETARY OF STATE: It is easy to be very focused internally and see the glass as half empty. I see the glass as half full. I think the changes that are happening in Bahrain are much greater than what I see in many other countries in the region.

(END VIDEO CLIP)

KING: Now that's the secretary of state talking to youth in Bahrain and yet, and yet, if we were having this conversation six months or a year ago, we would say Bahrain was taking more steps, that it was more liberal, that it was more moderate, that it was more open, but as is the case in many areas and we could go through the countries in the Gulf from Kuwait and the larger ones like Saudi Arabia, Bahrain in particular and go down the coast into the UAE, one step forward is often followed by two steps back.

TOWNSEND: Well and I'm (INAUDIBLE) defending their current conduct. But in fairness, we ought to put in context in Bahrain (INAUDIBLE) elections in 2005 and like many countries in the region including Kuwait, which you mentioned there is a large opposition in the parliament, some which is extremist. They have suffered with interference by Iran in the -- with the Shia, which is the majority of Bahrain's population, so there is a real sensitivity here to outside influence to extremist influence. And you know it is hard to tell from a distance now whether that's playing a part or whether these really are just peaceful protesters in Bahrain who are looking for democratic change. But you have to understand the fear based on history that the government of Bahrain and their allies in the region are --

KING: You say fear based on history. When you look at that map and you know how important and you've see the intelligence when you were in the Bush administration. You know how important that naval base is --

TOWNSEND: That's right.

KING: -- to protecting oil shipments and to keeping an eye -- let's be honest here -- there are a lot of things we can't talk about. There are a lot of U.S. intelligence assets along the Gulf that those governments don't like to talk about. But we're watching what Iran is doing and we're watching what others are doing. It's not just the military presence that we know of. Does the United States then react differently? Does the regime in Bahrain get more slack because of that military installation and its intelligence importance to the United States?

TOWNSEND: Well we will have to see. We've heard senior administration officials talk about the importance of the president being on the right side of history. And after the fall of the Mubarak government, we saw a tick-tock, if you will, the timeline, the chronology and push and pull inside the administration. I expect the same thing is going on now. And let's be candid, as you say, about the strategic importance. Part of the reason that this fleet is there is to keep the Straits of Hormuz open in the event the Iranians try to close it and so we can't afford not to have the fifth fleet there. We can't afford to have this unrest threaten our presence there --

KING: If you had a full democracy and the Shia majority which has now ruled for 200 years by a Sunni minority kingdom regime, would the Shia majority allow that base to stay? TOWNSEND: Pretty tough question and I think we don't know the answer to that. We certainly don't feel confident that they would permit them to stay and that is going to be a big driver in the administration's response.

KING: Fran Townsend, appreciate your unique insights. Thank you.

Ahead for us, Tea Party favorite Michele Bachmann is at again. She won't say if she believes the president is from the United States and she says the first lady wants a nanny state. But next protests of a very different sort right here at home, unions in Wisconsin are furious at the new Republican governor's budget plan and the outcome there will impact cash-strapped states across America.

(COMMERCIAL BREAK)

KING: Wisconsin is in gridlock tonight and if you live somewhere else and think it doesn't matter to you, well think again. These protests were led by unions and Democratic organizations including President Obama's grassroots organization. The anger is aimed at new Republican Governor Scott Walker, whose plan to close $137 million state budget gap includes a number of new limits and restrictions on collective bargaining by public employees' unions. Among the governor's proposals, prohibiting unions from deducting dues from paychecks, raising employee's contributions to their pensions, and dramatically raising employee's health care costs as well. Governors of cash-strapped states -- I'll get that out right tonight at least once -- cash-strapped states from coast to coast are watching this showdown. So is the president of the United States.

(BEGIN VIDEO CLIP)

BARACK OBAMA (D-IL), PRESIDENT OF THE UNITED STATES: Some of what I have heard coming out of Wisconsin where you are just making it harder for public employees to collectively bargain generally, seems like more of an assault on unions.

(END VIDEO CLIP)

KING: Governor Walker says he has no choice and that he was elected to make tough decisions. But the plan is in limbo tonight because State Senate Democrats, well they boycotted their session today and there was not a quorum, not enough members to move ahead with the planned vote. Let's discuss the state's fight and the national implications. Joining us the anchor of "STATE OF THE UNION", our chief political correspondent Candy Crowley and our senior congressional correspondent Dana Bash -- Candy, it is one state and somebody watching in Utah or Florida or Massachusetts or California might say why do I care? But most of those states, just 47 or 48 states in this country, essentially if you don't live in the Dakotas, there is a problem.

UNIDENTIFIED FEMALE: You're in trouble.

CANDY CROWLEY, CNN CHIEF POLITICAL CORRESPONDENT: Yes, you have red ink and they're not allowed to have red ink. I mean that's the huge difference between here, where you print more money, and in the states where you are required by law in most of them to balance your budget. This plays out across the country. We've already seen it starting to play out in New Jersey where Chris Christie took on quite verbally and you know with a budget (INAUDIBLE) took on teachers across the state.

And you know it is interesting to me how the opposition is selling this now. And it's about union busting, because that has more resonance they believe than saying, well we don't want to take cuts in our pay. We don't want to have to pay more for our pension or more for our health care.

KING: Hang on one second because I want to go live out to Madison, Wisconsin, Mick Trevey of our CNN affiliate WTMJ is there and he can join us live and he has been watching these protests play out all day. And Nick, do they understand and I want some details of the state log jam and whether the Democrats are ever going to come back to work or whether they think this is an effective strategy, but as you explain that, do they understand in Wisconsin that the nation is watching?

MICK TREVEY, WTMJ REPORTER: Yes, I think that has become clear. Between yesterday and today there has been some increase to national exposure on this story. I think people are aware that this is a big fight. And most certainly, the union leaders are aware this is a big fight. We know that some of the largest municipal and county, state employee unions have brought in national leaders and national lobbyists to put pressure on the state of Wisconsin on this issue. I think people here are well aware of what's at stake.

KING: And how long -- the State Senate Democrats essentially staged -- I can't call it a sit-in, because they didn't come to work -- but a go-away, a sit-out and they're to borrow a term from Dick Cheney, they are at an undisclosed location. Is there any sense tonight that this log jam will be broken?

TREVEY: Well as of yet, no. In fact, one of the senators that I talked with who was in this undisclosed location, told me they will not return to the State Capitol here in Madison, until they have a compromise, until the Republicans are willing to sit down with them, to look at the provisions of this bill and try and come up with some new solution or some new compromise, although we will tell you when we've spoken with Republicans here in the State Senate, they have laughed that off.

They have said there is no chance they are willing to do that. They say they have the votes to pass this as it is. And keep in mind, in order to get to a quorum they only need to have 20 senators in the chamber here. There are 19 Republicans. That means they only need one Democrat to come here to the Statehouse in Madison to physically be in the room to have the quorum.

That person could vote against it. That person can talk about it and oppose it, but that person needs to be physically present. Just one more person and this vote will go through and the Republicans say they have done the vote counting. Their members are ready to go and they're ready to make this a law.

KING: Fascinating -- Mick Trevey, appreciate your reporting and your help for us tonight. We will stay in touch with you.

And Dana, to the point he makes, the national unions are sending out all their leaders, all their lobbyists. You tried to reach them here in town today; they are all in meetings talking about this. Because they want to see who blinks, who cracks and it's not just because of budget fights in Wisconsin and budget fights from Massachusetts to California. When we get to Social Security and Medicare, special interests groups I'll call them, the people with the stake, the people who are important in elections this is big.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Oh this is big. This is very big because it definitely sets terms. Now Wisconsin is a little bit different because the state has a history of strong support for unions. And this isn't just about cutting pensions. It's about collective bargaining rights. But having said that, that's why Republicans in Congress jumped on this so fast, in particular jumped on the statement that you played from President Obama saying excuse me, isn't this what we learned from the last election?

We're supposed to lead and we're supposed to do hard things. You have people like House Speaker John Boehner who yesterday there was a vote to cut -- effectively cut jobs in his district by Republicans. And today he said you know what, it is just the way it is. It has to be, so Republicans are very much hoping that the lead that the Republican governor of Wisconsin is taking will be reflective of what they can do nationally.

KING: And it was striking. I want to bring Pete Dominick, our (INAUDIBLE) reporter. But Pete Dominick has a show on Sirius XM Radio on the Podest (ph) channel. And Pete, you are in touch with people all day long. I was noting earlier that Organizing for America, President Obama's grassroots organization got involved in this in a big way.

And duh, Wisconsin is very important to the president when he runs for reelection and it went Republican last year. So it's one of those states we are looking at with a lot of question marks. And the president is clearly casting his lot with the unions in Wisconsin. It will be critical to turnout in 2012. What did you pick up on the radio today about this?

PETE DOMINICK, CNN CORRESPONDENT: Well I'll tell you, you know the great thing is yesterday, when Rick Scott turned down the funds. I got on CNN.com's political tickers -- Rick Scott turns down the funds for the high-speed rail. So we opened up the phone lines. People from Florida calling and we get their opinions. Today we talked to a lot of people in Wisconsin.

Here is the thing, John King, when you are talking to anybody about unions; man it is a conversation where there is a lot of anger, really a lot of vitriol. But I think this is a very complex issue. There are no two sides to this issue. There are many angles to this issue. Notoriously Democratic voters vote for unions. Unions support Democrats and Republicans support businesses and business owners.

But as Dana just said, strong support in Wisconsin historically for unions. That's because that's where they were born really. And we talked about this, no matter how you feel. This is ground zero right now for this fight. And I learned a lot from listening to people today. I learned this. I don't think any union will have me, John King.

That looks like hard work. And I'm not sure there's an offbeat reporter union, but it's interesting to hear from the people who support, don't support. It is just not that simple. And we really do have to have a long and civil discussion about this issue because it's really important.

KING: I don't know if we can bring it back, but whatever your view on this, whether you support the governor or don't support the governor, support the protesters or don't support the protesters, if we can let's show the sign of the day again. They are creative if nothing else out there.

We had a "walk like an Egyptian -- there we go -- "walk like an Egyptian" sign among the protesters. So they are clever. We like that. So they are designed to get attention. So we're going to watch this play out in the state of Wisconsin. And as we noted all these other governors are watching. What is the most important thing to watch for? Is it if the unions blink, if the new governor cracks?

CROWLEY: I think if the new governor cracks. I mean at the moment, he doesn't seem like he is going to because I mean if there is a way to push some of this because we're talking about Republican governors, although there are some Democratic governors. If the governor cracks on this then there is an opening because we, again, are talking about things that are going to play out -- it's a little bit like Tunisia moves to Egypt, Egypt moves to -- you know it's kind of the same thing. It's the domino theory. If this one cracks, there will be others.

KING: And these governors, in addition to the new Republicans here in Washington -- we'll get to that later in the program -- they believe the old rules don't apply, that a lot of people would look at this and say, you can't possibly take on the public employees union. But they believe after all the turmoil families have been through the last few years, the old rules don't apply and they will be supported if they do this?

BASH: Oh absolutely, especially in a place like Wisconsin which as you were mentioning, politically has been Democratic for so long. And what a huge change in the last election in Wisconsin not only, you know in terms of the national level, Senate seat, this legislature and the governor -- he said this is something that the governor clearly believes that he has to do and there is no question in talking to Republicans nationally about sort of the fervor and the mood that they believe that this is something that ultimately will then affect them politically and in terms of public opinion.

KING: Candy Crowley thanks for helping. Dana Bash will be back a bit later on the fight in Washington. Pete, what are you going to make people mad about tomorrow on the radio?

DOMINICK: Well we'll see. I think we'll probably focus three hours on what Justin Bieber thinks about politics.

(CROSSTALK)

KING: My daughter will call in I promise you on that one. All right, Pete thanks very much. We'll see you tomorrow. When we come back, they are back. I'm going to show you something. I have it here. It's buried in my pile. Don't go to break just yet. Don't go to break yet.

All right, I won't show it to you just yet, but I'll show it to you when we come back. It is the president of the United States birth certificate, believe me, he was born in Hawaii. Some people just can't say it, though. We'll be right back.

(COMMERCIAL BREAK)

KING: A new change in tax law offers a benefit to mothers who breast feed and has some conservatives complaining of a new nanny state. Here's Republican Congresswoman, a Tea Party favorite, Michele Bachmann on "The Laura Ingraham Show".

(BEGIN VIDEO CLIP)

REP. MICHELE BACHMANN (R), MINNESOTA: I have given birth to five babies and I breast fed every single one of these babies, but to think that government has to go out and buy my breast pump for my babies (INAUDIBLE) you want to talk about the nanny state. I think you just got --

UNIDENTIFIED FEMALE: Literally --

BACHMANN: -- new definition of the nanny.

(END VIDEO CLIP)

KING: First lady Michele Obama told a group of reporters last week she wants to aggressively promote breastfeeding as a way to reduce childhood obesity. It's not the first time she's focused on this issue. Here she is talking a few months ago at a Congressional Black Caucus Foundation event.

(BEGIN VIDEO CLIP)

MICHELLE OBAMA, FIRST LADY: And because it's important to prevent obesity early, we're also working to promote breast feeding, especially in the black community -- where 40 percent of our babies never get breast fed even in the first weeks of life. And we know that babies that are breastfed are less likely to be obese as children.

(END VIDEO CLIP)

KING: Smart advocacy or too much lecturing, interference from the White House.

Joining me from St. Louis, radio talk show host, Dana Loesch. She's the editor in chief of the conservative "Big Journalism" blog. And in New York, lactation consultant Leigh Anne O'Connor.

Dana, to you first -- is Michelle Obama trying to create a nanny state in your view?

DANA LOESCH, RADIO TALK SHOW HOST: I kind of have to answer yes and no with this. And I don't think it's necessarily Michelle Obama that's trying to do this. I don't necessarily think it's the first lady, but rather some of the actions that the administration has taken.

Look, I am all for breast feeding. I myself breast my children until they were well passed a year. And I think it's fantastic and advocacy for that. I'm a very vocal support it.

But at the same time, from a conservative perspective, I have to question what the White House is doing, because breast pumps actually fall under medical devices, which as you know, under the health care law, those devices are going to be hit with a massive excise tax. So, don't make something tax deductible that you're taxing, just don't tax it. That's sort of the first criticism I think I have over it.

But the second thing and this I don't think necessarily pertains to the first lady, but the way that the White House is kind of positioning itself towards this -- as far as breast feeding is concerned, I realize that the White House is trying to exert some influence over businesses to offer, to be more breast-feeding friendly -- again, fantastic. But I don't think it is the government's role to direct business in that. Leave that choice up to the individual businesses, to the parents, to the individual, period.

KING: Leigh Anne, what do you think? Should this -- should the first lady be encouraging this? She's not an elected official or government employee per se, but she's the president's wife. When she speaks, one assumes she is speaking on behalf of the president. At Dana noted, there are some other government actions involved as well.

LEIGH ANNE O'CONNOR, LACTACTION CONSULTANT: Well, we know that breast feeding is important, and one of the biggest barriers to continued breast feeding is working. So if we support these women by giving them -- by letting their flexible spending dollars be used for this equipment, we're not paying for breast pumps. What we're doing is giving women -- letting women use their pre-tax dollars to have this equipment cared for and then they can continue breast feeding. And that's what we want.

It would -- the difference is, how much does it cost for these tax breaks versus the $13 billion that it would cost us in health care because women aren't breast feeding?

KING: Let me look -- let me actually lay out for anyone watching you who hasn't heard the change in the tax code. Let's show what it does. This is an IRS announcement from one week ago, "Recognizes breastfeeding supplies as medical expenses worthy of reimbursement through those flexible spending accounts." Some of you probably get through your employer, health saving accounts, you set money aside tax-free and you can use it on health care expenses. It recognizes breastfeeding supplies as a worthy medical expense. It also authorizes breastfeeding supplies to be itemized as a deduction when you deduct your medical expense if you reach the threshold on your taxes.

I want you to listen to Congresswoman Bachmann. She was on "Good Morning America" this morning talking about her take on the change in the tax code.

(BEGIN VIDEO CLIP)

REP. MICHELE BACHMANN (R), MINNESOTA: My quarrel isn't necessarily with the whole topic. I've given birth to five children myself. I strongly believe in breastfeeding. But I think what this points up again is that the tax code is used by government as social engineering.

(END VIDEO CLIP)

KING: If you follow that argument, Dana, am I fair to say -- if you take away deductions for breastfeeding devices, we should also take them away deductions for home ownership? Because that's, you know, if that's social engineering, it's social engineering, too, isn't it?

LOESCH: Well, you are talking to someone who thinks -- who subscribes to the Jimmy McMillan theory that things are already too high as is. I won't go in the full effect of that. But you get where I'm going with it.

I just -- I look at deduction -- again, breastfeeding is fantastic but the government, it's already kind of making it a little bit difficult for moms anyway with all of the excessive taxation. And we have 19 new taxes with the health care law. These excise taxes -- I think this is going to cost businesses in excess of over $20 billion a year, which is going to skyrocket, not only the cost of these breast pumps which I used when I was a nursing mother -- but also a lot of other related accessories to motherhood.

So, I just -- I think it's kind of a weird way that the administration is going about it. And again, with the businesses -- if businesses want to attract better employees and more employees by offering perks like breastfeeding rooms and pumps and all of that stuff, then if they want to make a smart business move, they should be allowed to make that decision for themselves without necessarily the government kind of exerting influence over that.

KING: How about that argument, Leigh Anne, that this should be the power of the marketplace, that a competitive business wants to hire you away from where you work right now and say, hey, come here, look what I will do to you to make your life better? O'CONNOR: Well, I think it's important that companies do get a tax break for offering breastfeeding rooms and breastfeeding supplies and time off for mothers to express their milk. It makes a huge difference. There's a huge return on investment on creating these opportunities for women and for their families, and you're going to retain employees.

It's -- and businesses don't know this until maybe somebody says, hey, this is -- this is important. This is going to make a difference locally and globally.

KING: Dana Loesch, Leigh Anne O'Connor, appreciate your time on this important debate tonight. We'll see you both at another time.

When we come back --

O'CONNOR: Thank you.

KING: Thank you both.

When we come back, stories breaking since the top of the hour and also this -- I told you I'd find it. This is the president's birth certificate. It is, really. He was born in Hawaii. Says so right here.

So, why is this still a debate among some Republicans? That on the other side.

(COMMERCIAL BREAK)

KING: Welcome back. Let's get a check on the latest news you need to know right now. A new tweet from "The New York Times'" Nick Kristof says, quote, "Bahrain's royal family has started a campaign to have me fired for my reports from here." Kristof is covering Bahrain's crackdown on pro-democracy protests. It's a bloody crackdown. And he told us earlier it involves centuries' old tensions between Shiites and Sunni Muslims.

(BEGIN VIDEO CLIP)

NICHOLAS KRISTOF, NEW YORK TIMES (via telephone): You have a Sunni royal family that's just presiding very uneasily over a largely Shiite population. And so, from the royal family's perspective, democracy is profoundly unpalatable.

(END VIDEO CLIP)

KING: A Texas congressman says new information about the killing of a U.S. drug agent in Mexico shows it was a sanctioned hit by a Mexican drug cartel.

On ABC's "Good Morning America" today, George Stephanopoulos asked the Minnesota congresswoman and Tea Party favorite, Michele Bachmann, if she believes President Obama is a Christian and was born here in the United States. Listen carefully.

(BEGIN VIDEO CLIP)

BACHMANN: Well, that isn't for me to state. That's for the president to state. And I think that when the president makes --

GEORGE STEPHANOPOULOS, ABC NEWS: Do you believe it?

BACHMANN: -- when the president makes his statements, I think they need to stand for their own.

STEPHANOPOULOS: But he has said it very clear. I'm just asking if you believe it.

BACHMANN: Well, I think we should take the president at his word.

(END VIDEO CLIP)

KING: If seeing is believing, I'm going to hold this up one more time. This is the president's birth certificate. It says he was born in Hawaii. It lists his mother's name and his father's name and it lists his date of birth and where he was born. This is an official government document we're showing to you there in a clearer form from the state of the Hawaii.

If you can come back to me for one second, I'll also show you these clever people who fabricated Barack Obama's birth also were able to put a notice in the newspaper, "The Honolulu Advertiser," saying that he was born that day. He was born in the United States of America, in Hawaii.

We at CNN have looked into this, I'm not sure why we spent so much time looking into it. But we have, because it keeps coming up.

And my question is: why?

So, let's ask Republican Ed Rollins and John Avlon. They join us from New York. And Cornell Belcher is a Democrat here in Washington.

Ed Rollins, I'm going to start with you first. Ed, what I'm going to -- first, I want to play this, because there are people who are too playful with this in my opinion. They're just too playful with this. And I can't quite understand why.

I want to play here a conservative. We could have a debate about his views on spending. We could have a debate about his views on immigration. But Jeff Flake asked point blank about the Birther controversy, here's his answer?

(BEGIN VIDEO CLIP)

REP. JEFF FLAKE (R), ARIZONA: If you want pushback, I will give it right now -- Barack Obama is a citizen of the country. We ought to get off this kick. And there are plenty of differences we have with the president, between Republicans and Democrats, than to spend time on something like this.

(END VIDEO CLIP)

KING: Why can't Michele Bachmann give that answer? Eric Cantor, the majority leader, was on "Meet the Press" recently. He wouldn't answer this question. They know he was born in Hawaii. Why can't they just say it?

ED ROLLINS, REPUBLICAN STRATEGIST: Well, I wish they would. I wish we get past this thing. You know, I think it got restarted up again when the new governor of Hawaii said, "I'm going to go out and prove that he was born in Hawaii. I was there when he was born. I knew his parents. I'm going to produce the certificate," and he couldn't. That started the whole round again.

I have never had any doubts that he was an American citizen and he could care. I mean, at the end of the day, I care about his policies. I care about things that are going on. Even if we had evidence that he wasn't a citizen, what are we going to do? He's president of the United States. Move forward, you know?

KING: Well, I want you -- John Avlon, I want you listen to this and I think Cornell might take more interesting than John Avlon. But here's Karl Rove. He's on "Bill O'Reilly" last night and he says, you know why this keeps coming up?

(BEGIN VIDEO CLIP)

KARL ROVE, FORMER BUSH AIDE: This is a White House strategy. They love this.

BILL O'REILLY, FOX NEWS: How do you know it's a White House strategy?

ROVE: Look, the president could come out and say, here are the documents. But they are happy to have this controversy continue because every moments the conservatives talk about this, they marginalize themselves and diminish themselves in the minds of independent voters. And every moment we talk -- we spend talking about this controversy is a moment we can't spend talking about the failed stimulus bill, reckless spending, Obamacare, his failures in foreign policies and his failure to live up to the promised that he made in the 2008 election. Look, he was born in Hawaii.

(END VIDEO CLIP)

KING: I'm going to actually side with Karl Rove that those who raise this diminish themselves. I think Karl is exactly right about that.

JOHN AVLON, CNN CONTRIBUTOR: Yes.

KING: But, John Avlon, any -- White House strategy, really?

AVLON: Right. I mean, he was right up until the point where he said this is a White House strategy. That's wishful thinking. That's absurd. Look, this stuff -- this vile has been pumped up on the fringes for over a year now. And I've been following it and writing an extensively. The problem is that you don't have folks like Bachmann and other folks slam it down decisively like Jeff Flake did.

And the reason is, is that they are afraid the fringe is blurring with the base and they don't want to alienate them. But this stuff is like they use weasel words like "I'll take the president at his word," which is what the speaker said over the weekend as well.

No. Decisively say the American -- the president is a citizen of the United States. Stop this. Move on.

But the folks on the far, far right stir this chum and it's rooted deep, bizarre anxieties. And it keeps living. A new poll came out and said 51 percent of Republicans primary voters believe the president wasn't born in the United States. That's a problem.

KING: If 51 percent of Republicans say they don't think Barack Obama was born in the United States and Cornell Belcher, you're a numbers guy, that is up from August 2009 when 44 percent of Republicans said that. So, I assume that's why some Republicans like to stir this.

CORNELL BELCHER, CNN CONTRIBUTOR: Well, I mean, let's stop playing around this. That birth certificate and all the evidence in the world isn't going to turn these people who want to believe that into believing it, because it's not reasonable and rational phase. You know, this is about something a lot more cynical and a lot more dark.

And I have to wonder I mean, what is it that they can't call him that they're calling him when they called him un-American. Look, the bottom line is that Barack Obama is more American than Michele Bachmann. And he's certainly more American than her idolized past, romanticized picture of what America is. They've got to open up their eyes and see what America is right now, what's coming for them, and stop playing these nasty little bipartisan divisional games.

Look, if you want to attack him for his policy, that's one thing. When you attack him for who he is and him not being American, that's taking it to a whole other cynical level.

KING: This may be my favorite moment in a political conversation in weeks because I am going to speak these words and everyone is going to listen. On this point, Cornell Belcher and company Sarah Palin agree. Listen.

(LAUGHTER)

(BEGIN VIDEO CLIP)

SARAH PALIN (R), FORMER ALASKA GOVERNOR: Those are distractions. What we are concerned about is the economy and we're concerned about the policies coming out of his administration and what he believes in in terms of big government and the private sector. So, no, the faith, the birth certificate, you know, others can engage in that kind of conversation. It's distracting. It gets annoying. And let's just stick with what really matters.

(END VIDEO CLIP)

KING: All right. Here we go. Here we go. I got a chance here. You go first and praise the former governor of Alaska.

BELCHER: Actually, she shows some real leadership there. The problem is, though, that, you know, with so many Republican primary voters think he's not an American citizen -- does she harm her front- runner status at the front line of the Republicans? But good for -- but good for her.

ROLLINS: I promise you in the debates in Iowa, in New Hampshire and South Carolina, this is not an issue. This issue is a dead issue. There's always a fringe that basically John Avlon writes a column for CNN. I write a column for CNN.

Every week, you look at the comments. It's scary what is written. No matter how center, I write them, a lot of kooky people out there on both sides. Our kooks basically love this issue and they want to wave it. It is not a relevant issue.

The president is an American citizen. He's the president of all of us. Let's move forward.

KING: Amen.

Well, we move forward. Amen. Time out here. We're going to take a quick break. Everybody, stay with us.

When we come back, there's talk again here in Washington of a government shutdown. Is it rhetoric or could it happen?

(COMMERCIAL BREAK)

KING: Here in Washington tonight, the Republican-led House of Representatives working late into the evening on budget cuts which President Obama threatens to veto. But as the government shut down looms, perhaps just a couple of weeks ago, Speaker Boehner isn't backing down.

KING: John Avlon and Ed Rollins back with us, along with Cornell Belcher and joining us, our senior congressional correspondent, Dana Bash.

Read my lips,: we're going to cut spending. At issue here is -- and this is hard for you at home because it's Washington-ish, we're operating right now without a budget, a continuing resolution. They can't agree on this big package of cuts and some Democrats say, just give us a couple of more weeks of a continuing resolution, and the speaker says, no, anything you get must have cuts.

DANA BASH, CNN SR. CONGRESSIONAL CORRESPONDENT: Right. And that's really -- that's what it comes down to when you're talking about potential government shutdown. The current bill that is funding the government runs out March 4th. That's two weeks from now.

So, we're having a huge debate about massive, massive cuts right now. The $61 billion is what the Republicans want. Democrats basically say, we want to keep it at current spending levels. That's not going to be resolved in the next two weeks.

So, the question is: what are they going to do just to keep the government running? The bomb that John Boehner dropped today was saying that, you know, generally, historically, they just kind of kicked the can down the road. He says, we're not even going to do that now, not even for a couple of weeks. And the Democrats in the Senate said, well, that just means we're headed far shutdown or showdown.

And you know what? If neither side gives because they're both backed into corners right now, it's entirely possible.

KING: Ed Rollins, as a Republican, do you worry about that? And as Ed answers, I'm going to walk over here because I want to show you one of the issues in this, which is the government's pumping up against its debt limit, which is one of the things they need to raise the debt ceiling.

ROLLINS: I never liked the term "read my lips." I was chairman of the congressional committee when that phrase was broken once before.

John Boehner will lose his leadership mantle if he backs down. He basically has to keep driving this agenda forward. Obviously, the Senate is not going to go along with him. And obviously the president made it very clear that if they did, he'd veto the bill.

So, you're not going to have a continuing resolution, and the end of the day, it may be a better environment to shut down the government. I'm not for it, but it's a better environment than it was when Gingrich did it because governors across the country are making very tough cuts and people are getting used to looking at these spending priorities as something very important.

KING: And, John Avlon, a couple of issues here. One is the Republican resolve against the Democratic president on spending cuts. And that could just in and of itself lead to a government shutdown.

But the other issue is they're trying to vote to raise the government's ability to borrow. And this red line is what the government is borrowing right now. This gold line is what it's allowed to borrow. And as you can see, we're going to hit pretty soon. The government is not going to borrow anymore money.

So, you can have a government shutdown and you could also have chaos -- essentially, the government out of its ability to write a new check.

AVLON: Yes, and look, raising the debt ceiling is not something to play chicken with. You need to raise the debt ceiling, but they should not just rubber-stamp it, they should add on like a budget resolution perhaps further controls to deal with the future spending.

But look, you know, I think when we accelerate the conversation to government shutdown, that appeals to folks, especially Democratic Party, who want to run against that issue. The Republicans do not have a conservative ideological mandate out of this election. But there's a very clear message from the electorate to reduce spending.

And the two parties should be able to find a way to do this. It doesn't always need to be brinkmanship. And there's a lot more of an appetite for spending than there existed in the past, but a government shutdown isn't in anybody's interest.

KING: Cornell, I want you to jump in. But, first, I want you to listen to Senator Barbara Boxer, Democrat of California -- the Democrats have been almost goading the Republicans to do this. They think -- they think they will benefit politically if it happens.

BELCHER: I wonder why.

KING: Listen to Barbara Boxer.

(BEGIN VIDEO CLIP)

SEN. BARBARA BOXER (D), CALIFORNIA: If the government is forced to shut down, members of Congress and the president should be treated the same way as all other federal employees. We should not be paid. And to take it one step further, we could not be paid retroactively once the government reopens.

(END VIDEO CLIP)

KING: Take that.

BELCHER: Read my lips. If they shut down the government, Ed, your boys are going to lose double digit seats in the next election. Look, they're playing with political Russian roulette here. They are going to get blamed for it because they're out in front of it and a lot of those swing districts seats with those big independents, they don't want the government shut down and they're going to blame the speaker on that. He's between a rock and a hard place.

BASH: Yes, but question is: if the House, actually, Republicans do pass something just temporary that has a little bit of a spending cut, it is going to be in the Senate Democrats' court to decide whether or not they want to shut it down or whether or not they want to pass that. KING: We'll continue the conversation. We'll see if the Senate becomes the world's most deliberative body or if it becomes the world's government shutdown body.

When we come back, the president is on the West Coast tonight for a dramatic meeting with a lot of high-tech CEOs. We're going to show you an interesting statistic when we come back.

(COMMERCIAL BREAK)

KING: Before we say goodbye tonight, there's Air Force One taking off from Andrews Air Force base today, a good place to start a little presidential trivia.

The former president of the United States, Bill Clinton, has disclosed while he was president, he sent two e-mails, only two in eight years as president. One to John Glenn, when he was up in space and one to the U.S. troops stationed in the Adriatic.

Now, where is Air Force One going now? The president of the United States is heading out to San Francisco. He's going to sit down to have an economy conversation with a whole host of high-tech executives.

I want to show you something. The president's a wealthy man from selling his books. Here's Barack Obama's net worth, somewhere in the ballpark of $5 million. He's meeting with the CEO of Cisco. Well, his network, they say, is only $1 million. So the president has him.

So, the president is in a room where he might be a wealthy man but, wow, look at that. He's out there to talk economy. Maybe he's talking a little fundraising for the next election. These guys could probably balance the budget.

We'll see you here tomorrow. I'll be live from Los Angeles tomorrow night.